Tag: trading

bitcoin-blockchain technology business

Cryptocurrency and Blockchain – Part 3 of 5 Weekly Series

Posted on by Pivotal Performance Processes

Common Crypto Scams

Exchanges

There is a huge rise in cryptocurrency exchanges; all wanting your attention, and sometimes your money, obtained by them through very obscure transaction fees that come with handling your purchases.

Crypto exchanges have appeared and disappeared almost overnight.

  • If you’re entirely new to cryptocurrency, you might not have heard of Gox. This was an early cryptocurrency exchange that at one point accounted for over 70 percent of all Bitcoin transactions worldwide. One morning, in February 2014, Mt. Gox suspended trading. It later emerged that 850,000 Bitcoins had been stolen (valued at $450 million at the time, over $3.5 billion as of this writing — yeah, you read that right!) over a period time. 

Trusting people in an entirely digital world is extremely difficult, especially if you cannot audit or verify what is taking place behind the scenes.

  • In the spring of 2017, a Mumbai-based company called OneCoin was delivering a sales pitch to a room of investors. Indian financial enforcement officers raided the meeting, ultimately jailing 18 OneCoin representatives for operating a cryptocurrency Ponzi scheme. At the time of their arrest, OneCoin had already moved over $350 million through a payment processor.
Pump & Dump Scams

Many prominent financial experts have also dismissed cryptocurrency as a scam.

In many ways, the thousands of smaller altcoins have taken the place of penny stocks, albeit with a technological edge.

Furthermore, there are several groups dedicated to this exact practice. They hold a monthly vote to choose an altcoin with a tiny market capitalization, and descend.

ICOs

Initial Coin Offerings (ICOs) are the IPOs of the cryptocurrency world. Cryptocurrency startups create initial coin offerings to raise substantial amounts of money. However, many of them vastly overestimate the value of their startup. Others are simply elaborate pump and dump schemes.

The Securities and Exchanges Commission (SEC) is extremely wary of ICOs. They advise that they suspend trading in stock when:

  1. There is a lack of accurate or current information about a company.
  2. Questions arise concerning the accuracy of publicly available information, including press releases and media coverage.
  3. There are questionable trading practices, such as insider trading, market manipulation, and more.
Vulnerability in Code has occurred.

The DAO – When DAO (a decentralized autonomous organization named for the acronym) completed their 2016 ICO, raising over $34 million, it was considered a success.

That was until some users exploited a vulnerability in the DAO code, and siphoned one-third of The DAO’s funds to another account. To return the funds to the original account, the Ethereum community had to agree to a hard fork, tearing the cryptocurrency in half.

A protracted cryptocurrency crash would ‘spill over’ into stocks, Wells Fargo warns.

 

Article researched and copy written by Laughing Fox Designs, providing results driven website development and social media actions to start-ups, small businesses and mid-size companies.  ©2018 All Rights Reserved

crypto-currency blockchain technology

Cryptocurrency and Blockchain – Part 2 of 5 Weekly Series

Posted on by Pivotal Performance Processes

It is now virtually impossible for humans to decipher blockchain. Bitcoins blockchain has proved impossible to hack, even with the aid of computers.

The technology of blockchain CANNOT be understated. This is possibly the biggest leap in technology since the creation of the internet.
Blockchain is now being engineered by a multitude of industries, including hospitals, banking, messaging apps and voting technologies.

Blockchain was originally developed by humans (we think) using open software called blockchain.

How do new coins come into existence?

New coin production is controlled by a process called mining, an intensive process where computers (mining nodes) compete against each other to secure the network by solving mathematical equations, collecting bitcoins as a reward if they are the first to create a new valid block, which is then broadcasted to the rest of the network and added to the blockchain.

    1. To mine cryptocurrency you need to download the free open source software.
    2. You also need to create a “digital wallet” (also considered a node), so you can receive payment for crypto you have created.
    3. Originally you could use the hardware of your PC to mine, but as the process became more intensive, now you must have specialized mining software to handle the power, these cost about $1,500 and up.
    4. The power / electricity needed for one of these hardware devices is enormous… enough to power 285,833 US homes as of 2015.

How does crypto compare to our current money system?

Currently we use a Fiat System. Ever since the US left the gold standard, public confidence in the fiat system has dwindled.

Fiat is currency issued by a government, but which is not backed by a physical commodity. Fiat suffers from inflation, when a government decided to “print” more of a Fiat currency, the value of everyone’s money goes down as a result. This is the exact opposite of what Cryptocurrencies aimed to solve.

How Cryptocurrency exchanges work:

The fiat system. There is nothing (no gold, no silver) backing the generation of the code.

Once you have created an account, you will have to link it with either a debit/credit card, or a bank account.

Afterwards, deposit how much BTC you’d like to exchange from your address, choose the currency of choice, and click on exchange. The process takes anywhere from a few minutes to a couple of days, depending on the exchange that you have picked and your bank/card provider.

Paying Your Taxes

It should be noted that in most countries, when you actually withdraw your cryptocurrency to Fiat, you will be creating a “taxable event” so you should be prepared to pay the tax owed under your local laws. Many countries differ on how they handle this, some are completely tax free, others use the Capital Gains model. The amount of time you have held the currency may also matter, making the difference between short-term and long-term Capital Gains.

As of 2013, law firms and tax return services began to include bitcoin tax preparation, and accounting software.

Trading exchanges are beginning to include platforms for trading cryptocurrencies just like they include trading for penny stocks; and meetup groups and investors services are beginning to open conversations about the trading of cryptocurrencies.

Tradestation Link: https://www.tradestation.com/university/video/the-real-breakdown-on-cryptocurrency-trading/

Can I pay for my lunch with crypto?

According to bitcoin.com, Overstock.com, Target, Subway, Amazon, Victoria’s Secret, and many others now accept the cryptocurrency and more companies are expecting to move in that direction.

So, though you may not be paying for your lunch today with cryptocurrency, it does seem as if there is a good chance that you will be tomorrow.

 

Article researched and copy written by Laughing Fox Designs, providing results driven website development and social media actions to start-ups, small businesses and mid-size companies.  ©2018 All Rights Reserved